In the first of four articles about the Islamic State murders in Paris and their aftermath, we look at France’s response to an assault on its way of life.

GIANT black-and-white graffiti, bearing a Latin inscription, appeared in the Place de la République in the days after the terrorist attacks that shook Paris on November 13th. Fluctuat nec mergitur, a maritime dictum meaning “tossed about but not sunk”, is the little-known motto of the city. It captured the mood of horror and defiance. Soon, the inscription was lined by candles in glass jars; the phrase spread on social media and was projected onto the Eiffel tower. Just ten months after the Charlie Hebdo terrorist attacks, a second bloodbath is sorely testing the capital’s reputation for joie de vivre—and its resolution not to become Tel Aviv-sur-Seine.

The dreadful events of that unseasonably warm Friday evening will remain a scar on the capital’s mind. At a moment when young Parisians were relaxing after work, three teams of terrorists went on a spree, killing 129 people. Three suicide-bombers blew up themselves and killed a bystander outside the Stade de France, where François Hollande, the French president, was among the spectators at a football match. A second group shot 39 people at three restaurants in the fashionable east of Paris. A third assault on the Bataclan, a nearby concert venue, led to 89 deaths.In January the killings at Charlie Hebdo, a satirical magazine that caricatured the Prophet, and of four shoppers in a kosher supermarket, touched the world. They symbolised a calculated assault on freedom of expression and religion. “Je suis Charlie” became a global badge of defiant sympathy. The latest attacks shocked because of their indiscriminate assault on convivialité and youth: drinkers at a pavement café; people watching a rock concert or cheering a football match. In the words of Islamic State (IS), which claimed responsibility, their target was the “capital of abomination and perversion”.This attack was the deadliest on French soil and Europe’s worst since the Madrid bombing in 2004. Yet in April an Algerian man was arrested for preparing an assault on two churches in Villejuif. In June a businessman was decapitated near Lyon by an employee of north African origin. And in August a heavily armed Moroccan was overwhelmed on a high-speed train. Since the summer, says Manuel Valls, the prime minister, five attacks have been thwarted. The country, he said, recalling words he used after the Charlie Hebdo murders, would have to get used to living with terrorism. What this means, and how France goes about curbing the menace, has deep implications for the way it, and Europe, hold themselves together..

Shocked and grieving, Parisians picked up their lives. “You can’t just stay in an apartment when you have small children,” says one mother who has started to take them to the park again. Others are more defiant: “We need to defend what Paris stands for,” says a young office worker, referring to its culture of outdoor life in public spaces. Charlie Hebdo’s front-cover cartoon captured this spirit: “They’ve got the weapons: Screw them, we’ve got the champagne!” But it was symptomatic of underlying edginess that a gathering to honour the dead turned to panic when firecrackers were mistaken for gunfire.France is again debating where to draw the line between security and freedom, as are other countries. Demands for new limits on encryption are being heard. In France, the attacks have strengthened the hand of those on the right, as well as the security-minded left, who have been battling a governing Socialist Party reluctant to infringe civil liberties further. A state of emergency was imposed on November 13th, giving the police sweeping powers to carry out raids and make arrests; Mr Hollande has asked parliament to extend it for three months.Most striking of all is Mr Hollande’s new martial lexicon. “France is at war” were his opening words before a joint session of parliament, in a speech laced with belligerence. He vowed to “destroy” IS, which he blamed for the attacks, and combat “the enemy” with “merciless” determination. He is tripling France’s capacity for air strikes on Syria and Iraq, having dispatched the Charles de Gaulle, an aircraft-carrier, to the eastern Mediterranean. On top of his decision to send troops into Mali in 2013, and to bomb IS in Iraq in 2014, this is part of a startling transformation from an unassuming consensus-seeker into a hard-headed war leader.Mr Hollande acknowledged the “cruel truth” that “it was Frenchmen who killed other Frenchmen” in his address. But he avoided talking explicitly about the extent of home-grown Islamism. Of the eight terrorists thought to have carried out the attacks, five have been formally identified and all are French: Omar Ismail Mostefai, Brahim Abdeslam, Samy Amimour and Bilal Hadfi all died. A manhunt continued for Salah Abdeslam, who fled to Belgium, where he and his brother lived, after slipping past police checkpoints. Two remain unidentified. A Syrian passport one of them may have used was probably a fake.

An attractive target

On November 18th police led a seven-hour siege of an apartment in Saint-Denis, to the north of Paris. Abdelhamid Abaaoud, a Belgian of Moroccan origin thought to be the mastermind behind the attacks, was said to be holed up there. The Paris prosecutor later confirmed that Mr Abaaoud had died in the raid.France’s vulnerability to Islamist terrorism seems to stem from an unusual mix of factors. “France is not the only target,” says Camille Grand, director of the Foundation for Strategic Research, a think-tank, “but it is top of the list as a highly symbolic one.” This is partly due to its robust foreign policy to counter jihadism. France is America’s main ally in air strikes against Syria, as well as the main guarantor of security in the Sahel. Mr Grand also points to French secularism, a strict creed that seeks to prohibit public displays of religiosity, and which has led to the outlawing of face-covering veils in public places.Yet to describe the attacks as retaliation is to misunderstand the nature of IS. It is not engaged in a strategy of reprisals but wants “to unleash civil war” and provoke a backlash against Muslims in Europe, as a means of drawing further recruits to its cause, argues Gilles Kepel, author of a forthcoming book on terrorism in France. As home to Europe’s biggest Muslim minority, some 5m-6m strong, France is an inviting target. The vast majority are law-abiding. But there is a disaffected fringe, particularly in the heavily immigrant banlieues, which ring most cities.In the days after Charlie Hebdo, there was a remarkable moment of defiant national unity. But it was difficult to sustain. In some parts of the banlieues there was an angry rumbling by those who called themselves “not Charlie”, and refused to observe a minute’s silence in schools. This time, managing the aftermath will be more difficult, not least because Europe is trying to cope with both a terrorist threat and a great migrant influx..

Putting the two together plays into the hands of a resurgent European far right, from Poland to Switzerland. France’s Marine Le Pen, leader of the National Front, has taken care not to strike too inflammatory a note, but said: “Our fears and warnings about the possible presence of jihadists among migrants have unfortunately now been turned into tangible reality.” In the run-up to the presidential election in 2017, the political fallout from the attacks is likely to benefit her more than anyone else.For Europe, France’s vulnerability to terrorism is a source of extreme concern, not least because the links behind the latest attack cross many borders. Mr Hollande has set the tone for Europe’s response by hinting at a new diplomatic approach to Syria and invoking the EU’s mutual-assistance defence clause.European countries agreed in principle to help. But no other leader has used the word “war”. Germany has been noticeably silent. Britain’s parliament has yet to authorise strikes on Syria. The French understand these constraints. Their appeal to European solidarity can be seen as a call for urgent progress on a broader fight against terrorism, including better intelligence-sharing and police co-operation, as Europe confronts the aftermath of its bloodiest terror attack in over a decade.

Beijing’s currency isn’t undervalued, protectionism would backfire, and raising tensions with Beijing could lead to disaster.

By Randall W. Forsyth

.

Photo: Darren McCollester/Getty Images

Donald Trump is trying hard to look presidential these days. Too bad he’s using Herbert Hoover as a role model.

Hoover, of course, is best remembered as having been president during the stock market crash of 1929 that presaged the Great Depression. What helped turn a normal recession into a global economic disaster was the spread of protectionism, starting with the Smoot-Hawley tariff, which resulted in retaliation even before Hoover signed the bill in 1930.By threatening to impose tariffs on China in retaliation for its alleged currency manipulation, a President Trump would risk starting a protectionist war similar to the one that helped precipitate the Great Depression. More worrisome, this would come while tensions between China and the U.S. over disputed islands in the South China Sea are escalating.Those concerns, at this point, thankfully are hypothetical. But Trump’s recent bluster about China’s currency betrays a deep lack of knowledge of economics, as well as of the actual facts and data driving the exchange rate. Most important, the Chinese yuan or renminbi is fundamentally overvalued, not undervalued, as Trump asserts. Moreover, if any manipulation has occurred recently, it has been meant to prop up the currency, not lower it. Despite barriers erected by the government, capital is fleeing the yuan because of its negative fundamentals and those of China’s economy.China’s monetary authorities are spending hundreds of billions of their foreign-exchange reserves—mainly dollars—in a vainglorious attempt to preserve the illusion of the yuan’s strength. The aim is to demonstrate that the currency should be a component of the Special Drawing Rights, the International Monetary Fund’s basket of currencies. Being added to the SDR is largely symbolic, but of huge importance to Beijing in terms of international prestige and to make the yuan a reserve currency alongside the dollar and the euro. But, in doing this, the monetary authorities are working at cross-purposes to efforts to stimulate China’s slowing economy, including six rounds of interest-rate cuts in the past year.Trump doesn’t let any of this get in the way of his story. His broadsides about “stupid” U.S. officials being bested by canny foreign governments drown out discussions of the facts. But as a light is pointed at his misinformed, reckless charges, how long can his campaign be carried by his xenophobic message?For now, Trump and his fellow Washington outsider, Dr. Ben Carson, stand atop the leader board of Republican presidential hopefuls. Their lack of governmental experience is at the core of their appeal, a dramatic demonstration of the contempt with which the governing class is held, and not without justification. Similarly, being a first-term senator no longer is seen as an impediment to the nation’s highest office, as the candidacies of Marco Rubio and Ted Cruz demonstrate, not to mention the history of the White House’s present occupant. The successful records of Jeb Bush, the former Florida governor, and John Kasich, the current Ohio governor, seem to be marks against them. In the past week, Trump demonstrated in written and oral statements that he is simply wrong about the facts and actions regarding China’s currency.In an op-ed piece in last Tuesday’s Wall Street Journal, Trump asserted that “the worst” of Beijing’s “sins” is the “wanton manipulation of China’s currency, robbing Americans of billions of dollars of capital and millions of jobs.” “Economists estimate that the yuan is undervalued anywhere from 15% to 40%,” he continued, without presenting proof or sources to back it up. As a result, China has imposed a “de facto tariff on all imported goods.” In response, he continued, “On day one of a Trump administration, the U.S. Treasury Department will designate China a currency manipulator. This designation will trigger a series of actions that will start the process of imposing countervailing duties on cheap Chinese imports, defending American manufacturing and preserving American jobs.”Last Tuesday evening, during the GOP presidential candidates’ debate on Fox Business Network, Trump complained that China’s currency manipulation isn’t addressed by the Trans-Pacific Partnership trade agreement, signed by the U.S. and 11 trading partners. That was until Sen. Rand Paul of Kentucky pointed out that China isn’t part of the TPP. Trump said the deal is designed for “China to come in, as they always do, through the back door and totally take advantage of everyone.”Regardless of China’s status vis-à-vis the TPP, Trump’s diagnosis of its currency maneuvers is demonstrably wrong. And his prescription is certain to be ineffective and have horrendous side effects.As for the supposed manipulation, that story is more than five years past its expiration date. From around the beginning of the Beijing Olympics in 2008 through the global financial crisis, the currency was held ruler-flat at 6.83 yuan to the dollar. But in the following 2½ years, the yuan steadily increased in value, to just over six to the dollar (so it took fewer yuan to buy a greenback).From early 2014 through midsummer of this year, the yuan declined slightly in value, fluctuating around 6.20 to the dollar. Then, in August, Beijing shocked the financial world with a sudden 3% depreciation. (See “You Say Yuan a Revolution?” Aug. 17.) Last Friday, the Chinese currency was near 6.38.As noted, the yuan’s recent decline should be viewed in the context of its 33% appreciation against the buck since mid-2005, when it was allowed to float, and its more than 55% gain against China’s trading partners in general. With the yuan tethered to the U.S. currency, it also has seen a significant upward revaluation internationally, along with the greenback.Bottom line: The yuan is up a lot. THAT’S ALSO BECAUSE the People’s Bank of China’s monetary policy had been inappropriately tight, according to David P. Goldman, head of the Americas division at Reorient Group in Hong Kong. Despite six interest-rate cuts in the past year, real rates remain too high amid China’s deflation, he argues. Indeed, if Beijing is manipulating its currency, it has been to keep it from falling further since August—contrary to what Trump asserts. In fact, Chinese authorities are demonstrating an “intractable will” to prop up the yuan in the face of “relentless capital flight,” writes Anne Stevenson-Yang of J Capital Research. The clearest evidence is a sharp decline in China’s foreign-exchange reserves. According to U.S. Treasury data cited by Bianco Research, Chinese authorities appear to have liquidated about $60 billion of Treasury securities in August to provide the dollars to defend its currency. (That should please Trump, given that he pledged in his WSJ piece to reduce foreign holdings of U.S. debt, a curious aim, given that global demand for our securities is a great advantage for America.)A further drop in the yuan won’t help Chinese exports, Stevenson-Yang explains. Overproduction of steel, a major export, and an overpriced currency have resulted in a one-third decline in the metal’s price. But a cheaper yuan won’t expand glutted foreign markets’ ability to absorb the surfeit of steel. At the same time, she estimates, capital flight from China is running at about $100 billion a month. “This is a key concern to China’s government, which wants to keep money at home to deploy on chosen investment targets and to maintain the optics of a historically unprecedented forex trove,” she writes.As with OPEC and oil, keeping up prices means restricting supply. Similarly, the Chinese central bank sops up surplus yuan with its dollar reserves. Again, this is precisely the opposite of the “currency manipulation” that Trump imagines. Moreover, this works against the PBOC’s efforts to ease monetary conditions through lower interest rates and reductions in bank reserve requirements. Easing monetary conditions—for domestic reasons—would lead to a lower yuan exchange rate.All of which sounds rather arcane. But misunderstanding currency-exchange rates— which improbably emerged as a topic of discussion in a prime-time televised debate— carries geopolitical risks. If a President Trump were to use tariffs to retaliate against China, countermeasures would surely follow. In the 1930s, protectionism led to tit-for-tat retaliation that contracted world trade. Lowering trade barriers since then has led to increased global growth. Leaving economics aside, threatening a trade war with China comes at a time when Sino-American tensions are rising more than generally realized. Clashes between the U.S. and China over the South China Sea, along with the latter’s sovereignty claims over some “artificially enhanced islands” poses a “tail risk,” according to BCA Research. That’s jargon for a low-probability event, “but one that would have momentous effects if realized.”The U.S. Navy sent a destroyer into the disputed waters on Oct. 27, and while BCA conceded that Washington has international law on its side, the Chinese consider the waters theirs. “By implication, the U.S. is challenging China’s extravagant sovereignty claims over a vast stretch of [the South China] sea, which links Singapore and the Indian Ocean region to the western Pacific and the massive economies of East Asia,” BCA observes.Confronting China over a phony currency issue won’t help the U.S. deal with the threat of China’s expansionism in the South China Sea. If anything, it could pose the specter of a 1930s-style trade war. Even worse, it could potentially lead to a military clash in the Pacific. Sorry, Donald, picking fights with our biggest global rival won’t make America great again.

- ETF investors sold the precious metal for a second straight week, albeit at a slower pace.

- Current sentiment is weak, but I view the medium-term risks to gold prices titled to the upside.

- I remain on the sidelines. I am now looking for a buying signal to take a constructive stance in gold.

Every week, I closely monitor net speculative positions on the COMEX as well as ETF holdings in so far as the historical economic behavior of gold prices suggests that over a short-term horizon (<3 months), gold prices are largely influenced by changes in the forward fundamentals, reflected in changes in net spec length and ETF holdings.

Speculative positioning(click to enlarge)Source: CFTC.

Gold.According to the latest Commitment of Traders provided by the CFTC, money managers, viewed as a relevant proxy for speculators, lowered massively their net long position for the third week in a row as of November 10, while spot gold prices fell by almost 3 percent over the period covered by the data.The net spec length dropped 50,338 contracts (or 75 percent) to 16,869 from 67,207 between November 3 and November 10, driven by a combination of a build-up of shorts (+25,516 contracts, the second consecutive weekly increase and the biggest one since November 2013) and long liquidation (-24,822 contracts, the third straight weekly decrease).

The net spec length is now down 81 percent year-to-date after being up 33 percent year-to-date as of October 20. This therefore reflects a sharp negative swing in sentiment against gold. The net spec length is below its 2015 average of 51,625 contracts and its long-term average (2006-2015) of 109,742 contracts. That said, it remains above the 2015 low when money managers were net short of 14,633 contracts.We believe that the outstanding US employment report for October, released November 6, was the trigger of the drastic deterioration in the spec positioning. As a reminder, non-farm payrolls rose 271,000, versus 184,000 expected, and up from 137,000 in September. While the October 27-28 FOMC meeting was the starting point of the negative change in sentiment towards gold as the Fed showed its increasing confidence about a liftoff in December, the release of the jobs report was a further sign that the Fed might be inclined to proceed to a rate hike next month. This was incidentally reflected in changes in the 30-day fed-funds futures, which are presently pricing in a 70-percent probability for a Fed increase at the December FOMC meeting, versus 30 percent before the October FOMC meeting.Looking ahead, we expect the net spec length to rise from current extremely weak level. Last week, I mentioned in my weekly report that despite my bearish bias, I would prefer to wait further market action before taking another (short) tactical position. I changed my mind. I now believe that given the massive fall in net long positions, money managers have not sufficiently "dry power" to exacerbate the sell-off. That said, I am not willing to implement a long position now as my indicators continue to point to a fragile sentiment.

Investment positioning(click to enlarge)Source: FastMarkets.

Gold.

ETF investors sold gold for a second straight week ending November 13, albeit at a slower pace than last week. While I was confused last week by the strong pace of gold ETF selling, I conjectured that some investors preferred to reverse some tactical positions ahead of the US employment report due to its strong source of volatility. I am also willing to admit that renew selling in gold ETF holdings over the past two weeks is due to a weak sentiment in the gold market, reflected in lower prices, which therefore lead some investors to retrench.However, I view the slowing pace of decline as a confirmation that gold ETF holdings are held by stronger hands. As I outlined in my previous report, in spite a downward trend in ETF holdings since late 2012, the pace of outflows has gradually declined, which leads me to consider that 1,500 tonnes represents a solid floor for total gold ETF holdings.Amounting to 1,523 tonnes as of November 13, total gold ETF holdings (tracked by FastMarkets) were down 6 tonnes from last week and 23 tonnes from the start of November. They are therefore on track to record the first monthly outflow in 4 months as investors were net buyers of 12 tonnes of gold in October, 2 tonnes in September and 10 tonnes in August. ETF investors are currently net sellers of 77 tonnes of gold on the year, due to strong outflows between March and July.Additional note: On Monday 16 November, gold prices gapped higher and rose sharply in the first part of the day. As I documented in my daily report, I conjectured that safe-haven flows toward gold were behind this upward move amid rising geopolitical tensions following the horrific attacks in Paris this weekend and the subsequent France's decision to launch "massive" airstrike on the ISIS stronghold of Raqqa in Syria. However, this seems not be the case. ETF investors sold about 3.6 tonnes of gold on Monday whereas the rest of the precious metals complex (silver, platinum, and palladium) experienced strong inflows. While one could have expected strong inflows in gold, those outflows suggest rather that sentiment in the investment community is weak.Looking ahead, although I do not discount the possibility that gold ETF holdings retest their current 2015 low of 1,517 tonnes seen early in August, I do not believe that ETF holdings will be a source of strong selling in the gold market. In other words, although physical ETF holdings could continue to move sideways to lower, the fact that they are hold by "strong hands" investors with a long-term philosophy should prevent those holdings to fall drastically, as it is the case in PGMs.

As noted early in November in one of my previous reports, Bears will come back with a Vengeance, extreme bullish spec sentiment led me to implement a double short position (one with a short-term view, another with a longer-term view).My bearish bet characterised by a risk/reward profile highly skewed in my favour moved for me and was closed last week, as indicated in my report.Since then, I have been on the sidelines. While last week, I was more inclined to play the short side, I am now more willing to play the long side.From a technical picture, the market is deeply oversold in the near term, as evidenced by the RSI (21) gyrating around the 14 level.From a fundamental perspective, I believe that money managers have sold gold too aggressively and too quickly so they are likely to lack some "dry powder" to drive spot prices much lower. That said, current sentiment appears to me weak in the sense that despite the resurgence of potential bullish factors such as geopolitical tensions, the gold market has not benefited from safe-haven bids.As a result, I prefer to await a bit further before taking a constructive stance on gold. As seen in the chart above, I would not be surprised to see GLD fall toward the $100 level, but it would suggest at the same time that money managers have become even more bearish, which would raise the likelihood of a strong short-covering rally. To sum up, I have changed my bias from bearish to bullish, holding the view that bulls will come back with a vengeance.

NEW YORK – It is a rare industry nowadays that is not at risk of being upended by digital technology. Amazon, having swept away bookshops, is now laying siege to the rest of the retail sector. In transportation, Uber is outrunning traditional taxi companies, while Airbnb is undermining the foundations of the hotel industry. Meanwhile, smartphones are transforming how we communicate and revolutionizing the way we discover and patronize businesses.

So it is no surprise that banking and financial-services companies are not safe from the immense transformations wrought by technological innovation. Indeed, for the last decade, digital startups have been penetrating areas traditionally dominated by the financial industry.

But there is reason to believe that finance will prove resilient.

Today, money can be sent to the other side of a country – or the world – simply by tapping an app, without ever interacting with a traditional financial-services company. Migrants’ remittances alone, which the World Bank estimates will total $586 billion this year, represent a tremendous growth opportunity for companies competing with banks to move money.

Meanwhile, would-be disrupters are offering opportunities to save and invest – the very heart of traditional banking institutions’ operations. Startups such as Acorns – an app that automatically allocates a proportion of everyday purchases to a pre-selected investment portfolio – are making rapid inroads into a very competitive marketplace.

Acorns, launched in 2014, already manages more than 650,000 investment accounts. The company – and others like it – are not just moving into the market; the simplified investment and savings processes they offer are expanding and transforming it. According to research by the digital ad agency Fractl, approximately 85% of millennials are saving a portion of their paycheck – a larger percentage than their predecessors.

Lending, too, is being transformed by technology. Crowdsourced funding and peer-to-peer lending schemes give borrowers the opportunity to circumvent many of the hurdles of traditional banking – including, in some cases, collateral requirements and credit ratings.

According to the research firm Massolution, the crowdfunding market has grown exponentially, from $880 million in 2010 to $16.2 billion in 2014. Global crowdfunding volumes are expected to double this year, surpassing $34 billion. In 2016, crowdfunding is expected to provide more funding than traditional venture capital.

Even financial services traditionally characterized by face-to-face dealings with clients, such as investment banking advisory services, have been affected. When Google conducted its initial public offering in 2004, it chose to bypass the investment banking industry, which traditionally underwrites the process of taking a company public. Instead, the company opted for an electronic auction in which anyone could participate. Other companies – like the financial research firm Morningstar – have followed suit. While these attempts to revolutionize the equity capital markets have yet to gain widespread traction, their very existence is evidence of the opportunities for disruption in this sector.

But it would be premature to conclude that traditional banking has yielded to new financial platforms.

Many of the new entrants have benefited from advantages that would be difficult to maintain were they to scale up in size and importance.

Traditional banking is subject to intense oversight, and regulations have only become more onerous in recent years, as regulatory authorities reacted to the 2008 global financial crisis by tightening rules on leveraging ratios and know-your-customer requirements. Many upstarts in the sector have carved out a competitive advantage by avoiding thresholds beyond which they would face substantial regulatory scrutiny and requirements.

This places a significant constraint on the size and type of financial transactions these new companies can offer. By steering clear of services that might draw the scrutiny of financial authorities, digital startups face a natural limit to the size of their market. Indeed, this arrangement – albeit informal – can be viewed as the way regulators manage the systemic risk posed by new entrants.

As the digital revolution evolves, much of the financial terrain in which technology companies are making the deepest inroads will come into much sharper regulatory focus. This will favor the established players. As a result, the digital revolution’s assault on the traditional banking industry is by no means overwhelming. In finance, at least, technology firms should not be viewed simply as a threat, but as a source of productivity-boosting innovation.

Traditional marketing has been taking it on the chin for a couple of years now as consumers show they value as far more authentic the product and service recommendations they receive from those they know, especially via social media. In this opinion piece, Curtis Hougland, co-founder of Ideaology, a not-for-profit social media agency for social good, notes that the rise of Ad Blocker is symbolic of the tectonic shift in advertising and marketing now underway. (Follow Curtis on Twitter @curtis_hougland.)

The redistribution of power from brands to individuals is the enduring legacy of social media. The recent rise of Ad Blocking represents a tectonic shift in the balance of power between marketers and consumers. This technology represents more than just a functional way to block digital ads: it represents the very end of marketing as we have known it.

Marketing is culture, and culture is marketing in America. The mass adoption of television, radio and the Internet required everyone to have a co-dependent relationship with marketing, which became ubiquitous, even celebrated.

In days gone by, ads interspersed the pages of LIFE Magazine, punctuated scenes of All in the Family and framed the webpages of Compuserve.com. Last month, they infiltrated the feeds of Instagram. Today, gas station pumps, elevator cars and dentist lobbies beam ambient marketing messages. The march toward omnipresent marketing appears inexorable.

Yet marketing stands at an existential crossroads.

For the first time we can read its epitaph: “Killed by Consumption, Eaten by Cannibals.”

Marketing is slowly being ingested and eliminated by the very consumers it ‘targets’ every day.

“As consumers bypass media with greater ease, the social feed is the wormhole to the entire online experience.”

The form and formats of marketing are expiring amid a failure to compete for attention with media, influencers, friends and family. One might say that the seeds of marketing’s demise reside within the 50 billion messages sent by individuals each day on What’s App alone.

The culprit behind this “dysadvertopian” future is, of course, technology.

*****

The computer revolution of the early 1980s, the Web revolution of the early ’90s and the social media revolution of the early 2000s constitute one irresistible trend realized in three temporal lurches: a greater individual/consumer control of experiences, both personal and commercial.

Technology catalyzed five trends that portend the death of traditional marketing:

more media and information;

greater access to this media and information;

self-organization of this media and information by narrower and narrower affinities;

control of the means to create and distribute this media and information;

tools to parse this media and information (and in so doing, our attention) in both public and private communication.

Within technology overall, social media is the fox in the hen house for the acceleration of change.

Social media is far more than a set of networks. It is a behavior, one in which people act on a biological imperative to share and socialize; an organizing principle by which people self-organize by increasingly diverse affinities; and an operating system by which middlemen (such as marketers) are universally disintermediated.

This social behavior is the dark matter that connects all communication, word-of-mouth spelled in 1s and 0s through billions of texts and posts each day. Social media reflects humanity, and as such, it is contradictory: it simultaneously reaffirms what people already believe, while exposing them also to more diverse opinions. It is the friction between more media and fixed time.

So with apologies to John Lennon, I ask you to … Imagine.

“Imagine All the People”

Consumers are simply outcompeting marketers for each other’s attention. Seventy percent of consumers trust brand recommendations from friends, but only 10% trust advertising, according to Forrester Research.Everyone understands the power of word-of-mouth to drive purchase decisions. People simply don’t like or trust marketing, an impossible long-term commercial position in the private sector.

The personal brand of the individual sharer commands significantly greater influence than the published brand today.Given this redistribution of power, brand content is relatively impotent. Corporate brands mean increasingly less as personal brands have come to mean more. Dove Beauty is brilliant marketing, but the campaign pales next to the authenticity of media from Michelle Phan, the self-described “vibe master” and make-up maven.Set against such trends as these, “marketing” — a term of art — will become an anachronism that follows “new media” (and soon, “social media”) into linguistic extinction.

“Living for Today”

That consumers bypass marketing with greater ease is irrefutable. In fact, consumers swat away marketing with disdainful regularity.According to a recent Reuters study, 47% of internet users in the U.S. already use ad blocking technology, and the percentage is higher among younger users. Marketing is increasingly ephemeral against the backdrop of busier, more impatient lives.

Netflix customers evade television ads. Spotify customers access 4,000,000 songs ad-free.FiOS customers watch new releases from their giant home theaters robbing theaters of overpriced popcorn sales and in-theater advertising. Forums such as Reddit are downright hostile to advertising, and 160 million consumers visit its dark recesses for respite from marketers. Instagram’s massive success has stemmed, in part, from its lack of advertising, which only introduced clickable ads in March.The most frequent form of communication in the entire world is text, which marketers have not effectively penetrated at the same scale.With each encroachment of marketing into social feeds, consumers move to darker (more private) channels with different permissions and languages. It is a cat and mouse game in which the winner is bound to be the individual. Features such as Facebook’s auto-play violate the basic tenet of consumerism today: The user is in control, and his attention is his own.

“Above Us Only Sky”

Consumers no longer need to seek marketing and media. Marketing and media come to them.Everything arrives and then commingles in feeds and streams, where the flora (media) and fauna (people) of social media reside.Despite being organized chronologically, the feed is fundamentally non-linear and unpredictable.The success of marketing depends on reaching people when they are emotionally engaged.Despite the promise of social advertising and programmatic media buying, these emotional moments are largely unknowable to either marketers or even to individuals themselves. Creative cannot keep up with data, because marketers create advertising rather than narratives.

“Every feed in social media represents a mega Walmart, or rather 7,000,000,000 superstores, designed by the individual himself or herself. E-commerce is recast as “everywhere-commerce.”

The right message at the right time on the right channel is a chimera. Human actions and human self-knowledge simply don’t align sufficiently to reach the goal of marketers. What humans want and what they do are simply not (always) the same.Ad-tech is ultimately a tool of users to filter out marketing, which cannot truly understand the complexities of consumer intent, which is by its very nature mercurial.

“I Hope One Day You’ll Join Us”

Every emerging marketplace matures quickly today. Brands are proliferating at an exponential rate, because social media drives everything toward narrower affinities and presents more open access to choice. PepsiCo, for instance, markets more than 25 brands of Mountain Dew alone.In addition, the Internet and social media have proved wildly efficient at disseminating information. Ideas surface quickly with few barriers to entry and facile access to capital. Choice is only ever a click or a gesture away. Consideration is won and lost in the exchange of a link in a text between friends. Loyalty, one of the primary attributes of a brand, fades in the face of this digital proximity to other choices.Marketers are quickly eating all the whitespace in the current technological and visual paradigms.

Consumers cannot handle all of this choice, but they do not have to, because technology is empowering them to filter marketing out of their existence.

*****

Ironically, this death of marketing at the hands of its customers is great for business. Each of these trends maps to a point in the future in which marketing loses mindshare.This future arrives in four easy installments:

“Living for Today” (in the Feed)

There is only one channel: you. Your feed is your persona, your intent, your avatar. Personal and professional, commercial and social, all blend in the feed.The individual accesses these experiences visually like the paragon of a Visual RSS Reader. This feed understands what the individual wants, because the individual instructs it, and the feed learns to differentiate between intent and marketing. It maps intent to location, affinity and authenticity. And as ad-tech becomes a tool of the user, not the advertiser, the feed turns endless choice into actionable choice based on the individual’s intent.

“Imagine All the People” (All Online)

As consumers outcompete marketers for each other’s attention, every piece of media contained in the feed is not only shareable, but shoppable.The functionality resides within the media itself to buy all of the products and services featured in the video, photo or post. The consumer bypasses the unwanted border fences of YouTube hotspots and Zappo’s site with ease. E-commerce loses the requirement to uproot the buyer from their media and direct them to a sterile form in an altogether different digital location to purchase.Every feed in social media represents a mega Walmart, or rather 7,000,000,000 superstores, designed by the individual himself or herself. E-commerce is recast as “everywhere-commerce.”

“Above Us Only Sky” (not Networks)

As the individual controls the marketing experience, communication shifts from public to semi-private.In the social media 1.0 world of Twitter and Facebook 2015, the excitement of being able to share with everyone resulted in an initial urge to, well, share with everyone. This openness acted as an invitation, or permission, for marketing to participate in everyone’s social experiences.As the feed orients the social experience around the individual, and less around the network’s rules, experiences can become more personal, and as a result, more immersive. The fear of missing out leads to a joy of missing out, because the individual, you, are now in control, not the network.This is the legacy of Snapchat, in which consumers find darker, more private places to elude the weird uncle that is marketing. Ephemerality of content actually increases its value today. Teens continue to create their own vernacular. It is tete-a-tete between consumers and brands, in which the more the brands infiltrate social experiences, the more the individual seeks darker, more personal channels.

“Marketing itself is a product no one likes or trusts, but which consumers could not avoid. Consumer control is a tectonic shift, not a trend.”

The era of social media (public) gives way to the era of experiential media (semi-private).

“I Hope One Day You’ll Join Us” (in a Marketing Free Future)

As marketing matures toward extinction amid a maturing consumer landscape, two types of marketing survive like cockroaches after the apocalypse.First, discounts and sales persist: Buy 1, Get 1!, Free, Must Go Now!, 40% off!Any direct marketer can relate how “free” trumps other messages.Second, sponsorships such as “Maxwell House Presents The Cavalcade of Starts,” in which the relationship between marketer and media is transparent, and the individual receives genuine value in return also persist. The digital Gazprom signs witnessed on television around the Women’s World Cup arena in Vancouver are here to stay.Content marketing evolves into an exercise in commissioning rather than creating. Influencer marketing reigns, because it represents the midpoint between crappy brand content and user-generated media. Brands have largely failed at content marketing, and cannot compete with technology or creators in this future.

*****

“You May Say I’m A Dreamer, But I am not the Only One.”

Of course, this article is not solely about the future. It strives to outline an emerging marketing cosmology about how marketers should behave today; the ways in which we can future-proof ourselves against these trends; and how we adapt in the short term to greater consumer control and more deeply immersive media. Too many marketing departments are operating business as usual when they should be fighting for survival.The Internet of the future and the Internet of the past do not destroy markets outright. Death often arrives by a thousand (or in this case a billion) cuts. It is difficult for marketers to see the endgame, because the competition from consumers is fragmented into so many small acts.Marketers’ false sense of confidence is logical in a way. The industry benefits from better data, a larger creative palette and more discerning customers. Today’s golden age seems incongruous with a gradual decline. So, marketers respond to their decreasing share of attention with what they know — even more marketing. But as supply grows, demand ultimately shrinks.Ultimately, any path forward for marketers is based on capitulation to, not competition with, the consumers.Marketing is at an inflection point in a battle it cannot win without joining the other side.Marketing itself is a product no one likes or trusts, but which consumers could not avoid. Consumer control is a tectonic shift, not a trend. This balance of power has shifted, irrevocably.Technology and individuals represent an unbeatable team.So … imagine there’s no marketing.It is easy if you try.

We talk a lot in these pages about what to do with one’s money, but I question whether most subscribers (forget about the public at large) have an adequate grasp of the basics. Without it, much of what we say may seem capricious or outlandish, crazy ideas readers tolerate only because we’ve been so right about the big trends. But the basics in speculating and investing are like the basics in martial arts: Just remembering them isn't enough; they need to be second nature. That means reviewing and practicing over and over.It's not an accident that we usually make good investment calls; the selections arise from a constant awareness of the basics. So I want to briefly review those fundamentals. Let’s start with gold. We’re very gold-oriented around here.You undoubtedly have a good position in gold. Many of your friends are aware that you’re a gold bug, and more than a few of them question your wisdom. Are you able to give them a succinct and cogent explanation not just for why gold is cyclically a good speculation, but why it’s money? I’ll wager the answer in many cases is, “No.”I say that because when I give a speech, I often offer a prize to the audience member who can tell me the five classical reasons gold is the best money. Quickly now; what are they? Can’t recall them? Read on, and this time, burn them into your memory.MoneyIf you can’t define a word precisely, clearly, and quickly, that's proof you don’t understand what you’re talking about as well as you might. Here, we talk a lot about money, so it only makes sense to know the subject completely. So, what is money? The proper definition of money is: Something that functions as 1) a medium of exchange and 2) a store of value.

Government fiat currencies can, and currently do, function as money. But they are far from ideal. What, then, are the characteristics of a good money? Aristotle listed them in the 4th century BCE. A good money must be all of the following:

• Durable: A good money shouldn’t fall apart in your pocket nor evaporate when you aren’t looking. It should be indestructible. This is why we don’t use fruit for money.

• Divisible: A good money needs to be convertible into larger and smaller pieces without losing its value, to fit a transaction of any size. This is why we don’t use things like porcelain for money; half a Ming vase isn’t worth much.

• Consistent: A good money is something that always looks the same, so that it's easy to recognize, each piece identical to the next. This is why we don’t use things like oil paintings for money; each painting, even by the same artist, of the same size and composed of the same materials, is unique.• Convenient: A good money packs a lot of value into a small package and is highly portable. This is why we don’t use water for money, as essential as it is. Just imagine how much you’d have to deliver to pay for a new house, not to mention all the problems you’d have with the escrow.• Intrinsically valuable: A good money is something many people want or can use. This is critical to money functioning as a means of exchange; even if I'm not a jeweler, I know that someone, somewhere wants gold and will take it in exchange for something else of value to me. This is why we don’t, or shouldn’t, use things like scraps of paper for money, no matter how impressive the inscriptions upon them might be.Gold is uniquely well qualified for use as money. No other substance meets those five characteristics so well. Gold’s main use, contrary to the belief of some, isn't in jewelry or dentistry, although those uses are important. Its main use has almost always been as money. But gold's ancillary uses are growing in importance, because, given its physical characteristics, it’s a high-tech metal. Of the 92 naturally occurring elements, it’s the most resistant to chemical reaction, the most ductile, and the most malleable of all the elements. It's also highly reflective, and an exceptional conductor of both heat and electricity.

There are lots of other advantages to gold as money. It’s by far the most private kind of money; gold coins, unlike paper currency, don't even carry serial numbers. That makes it truly untraceable. At current prices, it's more portable than cash, even in the form of $100 bills. It doesn’t retain traces of drugs, as does currency, which makes it less liable to arbitrary confiscation. Although efforts have been made to counterfeit gold bars, with tungsten filler and such, it’s much easier to authenticate than currency.

And it’s becoming increasingly apparent to all the world that paper currencies are nothing but floating abstractions; they will not hold value. Paradoxically, gold is now far more useful as money than it was at $35, and becoming more useful than $100 bills. That will be even truer as it goes to $5,000 (my current guess) in terms of today’s dollars.Until quite recently, 90% of the world’s people were either flat-out prohibited from owning gold (Russia, China and the rest of the ex-communist world) or simply too poor to consider it (most Indians and other residents of the Third World). But these people are now allowed to own gold and have a fast-increasing ability to buy it. And they’re rapidly doing so. Their cultures have long histories with the metal and recent histories of living in a police state; they understand the value of real money. Although common people are now the biggest gold buyers, many governments and central banks are accumulating it as well.I expect that gold will soon become the preferred medium of exchange for many. Early adopters will include dealers in drugs, armaments, and other prescribed merchandise; these folks are very security conscious. They will be joined by all manner of people who just want to do business below government radar. And in the years to come, paper currency is gradually going to be eliminated by governments in favor of debit cards, credit cards, and other media of electronic transfer. Governments prefer these things, for obvious reasons; they make anything you buy or sell a matter of permanent record. People, therefore, are going to need a private way to t rade when paper cash is unavailable.It’s not just that cash will be harder to come by and harder to use. People won’t want to hold it as inflation gets serious; as U.S. dollars are increasingly viewed as hot potatoes, people around the world will gradually go to gold. In 100 or so countries, the dollar is already the de facto currency for large purchases and long-term saving. What will people in these countries do as the dollar starts losing value rapidly? They won’t go back to their untrustworthy local currencies; their only reasonable alternative is gold. All these things will add to demand for the metal. This is good news for those who own gold in size now.The downside, of course, is that these same things will draw more attention to gold from the state, which doesn’t like to see competition to its currency. Will they, therefore, attempt to outlaw gold again? Or, more likely, regulate its use; perhaps by requiring all gold owners to register it and/or store it in approved facilities? Anything is possible.Right now, you can still move coins across most borders with relatively little risk or aggravation. There’s the $10,000 declaration rule, of course. But U.S. Eagles, for instance, have a $50 face value, and 200 of them are worth several hundred thousand dollars; although I don't suggest you carry anything like that with you for lots of reasons, even though it may be technically within the law. My guess is the rules will soon be modified to encompass market value and will be more strictly enforced. Already you can find jump-suited imperial troopers on the jetways of many international flights, ready to inter rogate you and search your carry-on luggage for violations.You may be thinking to yourself, “I already know this stuff; I don’t need to hear it again.” That would be missing the point. Almost everybody, even gold bugs, has far too little gold to buy more. Most people have none at all. Pity the poor fools. Gold is going to be reinstituted as money within our lifetimes, simply out of necessity. But that can only happen at higher prices, since only about six billion ounces exist above ground in the entire world.Here’s the bottom line: Forget those ridiculous nostrums about having 5% of your portfolio in physical gold, for insurance. I’d say, have a very significant portion of your net worth in gold. And if you can manage it, keep most of it outside your home country. And get working on it as soon as you finish reading this.

Debt

Now that we’ve defined what money is, let me further define what money is not: Debt. All U.S. dollars, which is to say Federal Reserve Notes, are debt. They are neither redeemable for anything by their issuer, nor is there a limit on how many can be created. They represent only a vague claim against the “good faith and credit” of the United States government, which is to say the government's ability to extract taxes from its subjects. But Uncle Sam has shown himself to be remarkably lacking in good faith and is currently embarked on a course to destroy his credit.Remember that the dollar is literally an “IOU nothing.” It’s true that your grocer and your barber have to accept the dollar because of “legal tender” laws, and because they currently wouldn’t know what else to take in payment. But that’s not true of foreigners, who own something like $10 trillion; they’re starting to look at them more and more as “trading sardines.”That’s a simple fact, and it has economic and investment implications we’ve written about extensively. Other currencies are no better; most are worse, and many of them are backed largely by dollars. Most countries’ currencies have only very little value outside of their issuer’s borders. Be glad you don’t have too many Zambian kwacha or Burmese kyat…Governments, however, are not the only ones who think that debt is money. It seems that many people who get a bunch of credit cards, enabling them to spend beyond their means, imagine that they have money. And they also think that owning the debt of others, like government bonds, means they have money. A bank deposit isn’t really cash; it’s a debt of the bank. There are several trillion dollars in money market funds; 100% of that money is invested in the short-term debt of banks, corporations and governments. I would be very leery of these things. Debt is not always repaid. Money, which is to say gold, simply “is.” That distinction is lost on almost everyone. Don’t be among them.Here, I want to emphasize something else you certainly know but may not have acted on. You not only want to own gold, you want to “short” the dollar. But trying to trade currencies and interest rate futures is not the way to do it; that approach is risky and entirely too focused on the short term.Here’s the smartest thing you can do with debt: Take out the largest, longest-term, fixed-rate mortgage you can on your home, especially with rates near all-time lows. You’ll win as the dollar is destroyed, and you’ll win as interest rates eventually go to the moon. And you’ll win as the asset you place the proceeds in appreciates.This last part is critical. Borrowing $500,000 and then frittering it away will only leave you renting in a trailer park. Take the money and buy gold. Or, perhaps, just leave it in secure short-term instruments that will earn the high interest rates that are always the companion of high inflation. That money also will be safest in a foreign jurisdiction, but if you keep it in the U.S., consider keeping it in an IRA or other tax-sheltered vehicle.Yes, I know it’s a comfort living in a debt-free home. But even if it appears debt-free, your ownership is no more than an ambiguity. Try not paying the property taxes, and you’ll find out who really owns it. The bottom line is that, in a few years, as interest rates and inflation go up, you’ll see that mortgage as a gift.This relates to the issue of “cash” in dollars. There’s something to be said for being very liquid today and holding dollars, even though the dollars are a ticking bomb. But that’s simply because almost everything else in the world is overpriced.That sounds paradoxical, or perhaps even metaphysically impossible. How can “everything” be overpriced? It’s happening because trillions of currency units have been created all over the world in the last few years, and other asset bubbles are in process of inflation. People are holding dollars only because they’re liquid and they see no bargains elsewhere.Large, successful corporations, like Intel, Apple, Microsoft, and Exxon, each has scores of billions of dollars. The cash holdings of U.S. corporations are in the trillions. When the dollar starts losing value rapidly, the people running those corporations will panic and look for a place to hide from inflation. Many will buy their own stock, try to take over other companies, or buy raw materials for their own business. Others will just be deer in the headlights. (I don’t want to get into a discussion of where the stock market is going; there are titanic forces pulling it down as well as pushing it up. (That’s a subject for a future article.)Let me reemphasize that the Greater Depression is still in its early stages. The low interest rates and relatively low inflation rates we’ve had recently aren’t going to last. They will soon be replaced by wildly fluctuating markets and rapidly depreciating currencies. We could have a catastrophic deflation, where trillions of currency units are wiped out. Or we could have a hyperinflation, as governments create trillions more of them. Or both phenomena in sequence.But, as bad as they are, those are just financial phenomena; what will be much, much more serious are things looming on the political, economic, social, and military fronts of the Greater Depression. These things are why I suggest you own more gold, even though it runs counter to my instincts as a bottom fisher to buy something that’s no longer cheap.The bottom line is that you want to get out of the dollar before everyone else does. Now is an excellent time to short the dollar with a long-term, fixed-rate mortgage. And put the proceeds in gold.

A Syrian refugee waits in a heated tent in the town of Hanging, Austria, as she waits for further transport to Germany on Nov. 3.

Germany could approach the refugee crisis without surrendering its civility. But instead, the basest of anti-foreigner sentiment is taking hold in many places. If it continues, we could soon witness an atmosphere of brutality not seen in decades.Recently, I just returned to Germany after spending a couple of years in the United States as a foreign correspondent. In that time that I've been back, I've become concerned, wrought with worry that my own country is losing its civility. In America, I was often appalled by the brutality of a society where the majority support the death penalty and police are allowed to shoot people in the back even if they don't present an immediate threat. I can't change the fact that I am German, but for some time, I was pleased with that destiny. I was proud -- not proud of Germany, but proud to be from a country that had apparently succeeded in becoming more empathetic and civil.

Firing on Refugees?

But the country I have returned to is a different one. It's a country in which the state chairman of the right-wing populist Alternative for Germany (AFD) party in North Rhine-Westphalia has declared that, if need be, Germany's borders must be "protected using the force of arms," which would mean no less than allowing refugees to be shot at.It's a country in which journalist Helmut Schümann could be clobbered from behind and disparaged as a "filthy leftist pig" because, a few days earlier, he had written a critical column in the Berlin daily Tagesspiegel entitled"Is this still our country?" It's a country in which the candidate for mayor in Cologne, Germany's fourth largest city, could be seriously wounded with a knife because her assailant didn't like her refugee policies.It's a country in which 30 Germans hunted down and beat up Syrian refugees using baseball bats in the eastern city of Magdeburg. It's a country where the language used to foment against foreigners -- both on the ground and online -- makes even Donald Trump's tirades against immigrants seem harmless.I suspect that one of the first reader comments after this gets posted will be, "Get lost you traitor."On a recent Sunday, a group of tax drivers was waiting in the military area of Berlin's Tegel airport, the terminal used for flights by high-ranking government officials. The German defense minister had just arrived from Bahrain in an official government jet, but the taxi drivers apparently thought the plane was carrying Chancellor Angela Merkel. One proudly told me that he and his colleagues had half-joked that if one of them received Merkel as a passenger, that he would driver her to a nearby lake, tie stones to her feet and let her sink to the bottom. Because of her refugee policies.

Base Sentiment

What has happened to Germany? Does the sudden influx of hundreds of thousands of refugees justify forgetting almost everything that used to be important to us? The refugee crisis is, of course, a challenge. Solving it will take time, money and energy. But Germany has all the resources it needs to manage this crisis without surrendering its civility. Instead the mood in the country is akin to a drunken rage of the kind last seen in the beer halls of the 1920s Weimar Republic -- that period of crude, uncivilized behavior that paved the way for Hitler's rise and the most brutal decade in world history.Then, too, criticism and anxiety wasn't put forth in the form of discourse. It was expressed in the form of fist fights on the streets. We know today that this culture of brutality played a considerable role in the failure of Germany's first attempt at democracy. Ultimately, the loud and the brutal severed society's vulnerable ties. We are obviously not anywhere close to that point today. Those threatening our society today are not in the majority, but there is still a large number of them. The Federal Republic of Germany established a functioning democracy in the decades after Hitler and its people had good reasons to be proud of the country's political culture. But no one should take it as a certainty that this achievement is safe forever. It's also, incidentally, highly paradoxical that many of the people who are expressing this anti-social behavior today have adopted terms like "the cultural nation Germany" or "the land of poets and thinkers" to justify their actions, because nothing would be more shameful to the dead poets and thinkers than the gentlemen who are fueling xenophobic sentiment, issuing orders to fire at refugees or calling for Angela Merkel to be drowned or hanged.In his "Winter Tale," the great German poet and thinker Heinrich Heine once wrote: "O how I detest the trumpery set, Who, to stir men's passion heated, Of patriotism make a show, With all its ulcers fetid."

Powerful gamma rays from the centre of the Milky Way look ever more like signs of an elusive part of the cosmos.

“WHEN you have eliminated the impossible, whatever remains, no matter how improbable, must be the truth.” Though that maxim of Sherlock Holmes would rarely withstand scrutiny in the everyday world, where facts can be fuzzy and the truth is often protean, it is not a bad one for fundamental physics—a field where there really is only one right answer. It has certainly been the approach taken by Dan Hooper and Lisa Goodenough, two hunters of some of physics’s most elusive creatures: the particles of which dark matter is composed. They think they have eliminated all alternative explanations to these particles being the origin of a powerful clutch of gamma rays that come from the centre of the Milky Way, the Earth’s home galaxy, and they have been saying so for several years.This week the chief remaining group of sceptics—the team that runs the satellite which detected the gamma rays in question—has thrown in the towel and agreed that it, too, can come up with no convincing alternative. Though this concession does not, quite, close the “Case of the missing WIMPS”, it will require a considerable reversal of fortune for Dr Hooper and Dr Goodenough now to be proved wrong.

The WIMPS in question are weakly interacting massive particles, the name given to the putative components of the mystery that is dark matter. Exactly what WIMPs are is not clear. What is clear is that they have gravitational attraction, but otherwise interact only vanishingly rarely with the more familiar matter of which atoms are made. Nor do they interact with light. Dark matter is thus invisible. Everything from the motions of galaxies to calculations about what sort of universe came out of the Big Bang says it must exist—and must outweigh familiar, atomic, matter by about six to one. But no one has ever detected it other than by its gravitational effects. Dr Hooper and Dr Goodenough think they have found a second way. They believe that the gamma rays they have been analysing are flashes of radiation given off when WIMPs run into one another.

Spot marks the “X”

The satellite which collects these flashes is Fermi, an American space telescope launched in 2008. Gamma rays (electromagnetic radiation like light, but much more energetic) are generated by the universe’s most violent processes—the leftovers of supernovae, particles accelerated in potent magnetic fields, matter swirling ever faster around black holes and so on. Data on the rays Fermi detects are published unedited, so that any scientist who wishes can poke through them.

Among those who poked were Dr Hooper (who works at the coincidentally named Fermi National Accelerator Laboratory, near Chicago) and Dr Goodenough (then a graduate student at New York University; now at Argonne National Laboratory, also near Chicago). They looked in particular at rays from the centre of the Milky Way. As is true of any galaxy, much of the Milky Way’s matter—including its dark matter—is concentrated at its centre. This therefore seemed, to Dr Hooper and Dr Goodenough, to be a good place to look for signs of colliding WIMPs.Unfortunately, the amount of matter at the Milky Way’s centre means there are many other sources of gamma rays, too. The two researchers had therefore to subtract from the data collected by Fermi all of the radiation they thought could be accounted for by cosmic objects already known to astronomers. What they were left with (see picture above, of a computer-generated image of the gamma rays superimposed on a visible-light photograph of the Milky Way), was a bright residuum of gamma radiation that would be inexplicable if it were not caused by dark matter.Dr Hooper and Dr Goodenough first observed this surplus six years ago, and made it public then, so that other physicists could attempt to refute it. Nor was their claim the only one of its kind: the scientific literature abounds with reports of intriguing blips spotted in Fermi’s data by enterprising researchers. But, while other claims to have seen dark matter in these data have fallen away, explained by ever-better models of the underlying physics, or dismissed as artefacts created in the telescope’s machinery or in the maths needed to subtract the known from the unknown sources of radiation, theirs has not.The phenomenon they see falls off in intensity away from the Milky Way’s centre exactly as would be expected were dark matter responsible. And the frequencies of the gamma rays match what several plausible-looking models predict will happen when WIMPs cross paths: transmogrification into familiar-matter particles called bottom quarks, with the balance of the energy involved speeding off as gamma rays of exactly the sort Dr Hooper and Dr Goodenough have seen. The truth of their observation is therefore now widely enough accepted in dark-matter circles that the putative particle responsible has, playfully, been dubbed the “hooperon”.The endorsement Dr Hooper and Dr Goodenough really wanted, though, was from the Fermi team itself, which knows better than anyone else what the telescope’s kinks are, and thus how artefacts might be created. On November 10th that endorsement came—with the release of an analysis to be published in the Astrophysical Journal, led by Simona Murgia of the University of California, Irvine, who helps run the telescope’s main detector.Dr Murgia says Fermi’s operators—who were, of course, able to see the data as they arrived, and thus steal a march on outside analysts—knew about the anomalous surplus even before Dr Hooper and Dr Goodenough, and have been working ever since to try to explain it away. They kept shtum because, she explains, grand international collaborations like Fermi are conservative by their nature. “When you see something you expect, you write a paper,” she says. “When you see something you don’t expect, there’s a lot of discussion and arguing and it’s not always helpful. In this case it delayed things a bit much.”

On being a WIMP

There are still a few die-hards who do not believe in hooperons. They suggest that if an ensemble of millisecond pulsars (dead stars that rotate hundreds of times a second) were buried in the Milky Way’s middle, that might do the trick. To see off this theory (or indeed, prove it correct) requires further lines of evidence.One such may be dwarf galaxies—conglomerations of just a few billion stars (as opposed to the hundreds of billions in galaxies the size of the Milky Way) that are believed to host lots of dark matter and few confounding gamma-ray sources. Fermi can peer at those too, and has. Indeed, gamma rays it has detected coming from one such galaxy, Reticulum II, may support the Hooper-Goodenough hypothesis. Another possibility is that an intriguing signal noticed by XMM-Newton (a space telescope that scans the skies for X-rays rather than gamma rays), which has defied preliminary attempts at conventional explanation, might turn out to be a consequence of dark matter.Dark matter might also be caught more directly, in vast underground laboratories on Earth. These employ lumps or tanks of special materials dedicated to detecting the flash of light or heat that occurs on those rare occasions when a WIMP actually does deign to interact with an atomic nucleus. The sensitivity of such experiments has improved markedly in recent years, so WIMP fans remain hopeful.And WIMPs may even show up in the Large Hadron Collider, a particle accelerator in Switzerland which, after a long upgrade, should now be powerful enough to spot evidence of dark-matter particles in the detritus of its smashings.What is at stake for all these efforts is tremendous. If and when any of them does confirm the suspicions of Dr Hooper and Dr Goodenough, a new and odd inhabitant will have to be admitted to the zoo of particles known as the Standard Model; a new taxonomy will have to be developed to accommodate it; and particle physicists will have six times more stuff to study than they had before.

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.